The Uber Rival Putting a New Spin on Anti-Labor “Disruption”
▻https://jacobin.com/2024/11/uber-empower-washington-dc-regulation
5.11.2024 by Declan Cullen, Katie J. Wells, Kafui Attoh - In Washington, DC, rideshare service Empower is arguing that it shouldn’t be subject to the same labor and safety regulations as competitors like Uber. In doing so, it’s updating the antidemocratic “disruption” strategy that Uber pioneered.
On September 19, 2024, a small crowd of forty drivers and supporters of a new rideshare service rallied at Freedom Plaza outside the DC Council building in Washington, DC. The protest’s target was the appointment of Jonathan Rogers as the director of the city’s Department of For-Hire Vehicles (DFHV), an agency that exercises mild oversight of such companies. Protesters held signs saying, “Support drivers, delete Uber, download Empower,” and “DFHV makes $191,000/year, no wonder you don’t care about affordable rides.”
Empower, the new ride-sharing service, launched in DC in 2020. In the years since, the DFHV has repeatedly denounced the company for operating illegally; as interim director of the DFHV, Rogers has maintained this stance. In December 2023, the DFHV issued a cease-and-desist letter reminding riders that Empower “is not registered with DFHV and is not authorized to operate as a ride share provider in the District.” The DFHV began impounding vehicles and imposing fines on Empower for illegal operation, which are currently in excess of $100 million. The DFHV also discouraged the public from using Empower, citing the possibility of “seriously negative consequences for the passengers.”
Then, the DC attorney general’s office sued Empower for public harm, including a driver assault on a passenger. The DC Council joined the pile on by announcing an investigation into Empower’s “unauthorized operations.”
These attempts to rein in Empower have led to a showdown that bears an eerie resemblance to DC’s standoff with Uber more than a decade ago. Empower presents itself as a cheaper, more driver-friendly alternative to Uber, and accuses the city of protecting the older company’s monopoly on rideshare services. In reality, Empower has adopted Uber’s worldview and deployed Uber’s playbook, and is pushing the model of the gig economy to a new extreme. Empower is the logical and dangerous conclusion of Uber’s victories in DC and around the world.
Enter Empower
In DC, all rideshare companies are supposed to register with the city so that the DFHV can guarantee a number of minimal guardrails for public safety and consumer protection. The DFHV is tasked with ensuring that drivers and passengers are insured in the case of a crash, that drivers are subjected to background checks, that rules against racial discrimination are enforced, that taxes on ride-sharing services are paid, that data on ride-sharing is shared with city officials, “that companies also provide accessible apps for people with disabilities,” and that companies “service the entire District.”
Empower, led by CEO Josh Sear, has refused to register with the agency. The company has repeatedly informed the DFHV that its drivers are properly vetted. More fundamentally, Empower argues that attempts to register it with the city misunderstand its novel business model. Unlike its competitors Uber and Lyft, Empower’s business model means that the company doesn’t take a cut of each ride’s fare; it all goes to the driver. Instead, Empower uses a subscription model where drivers pay a variable monthly fee (anywhere from $50 to $450) to access the platform and another fee to access their paychecks.
A protest in support of Empower outside the DC Council. (Courtesy of Katie J. Wells)
Empower claims it does not have to register with the DFHV because this model lacks “the kind of contractual labor relationship necessary for Empower to be ‘in contract with’ its subscribers.” DC courts, however, have rejected this claim, ruling that Empower is in fact “a private vehicle-for-hire company subject to DFHV’s regulation.”
Given this loss, Empower is now trying to win in the court of public opinion, a key strategy of the first wave of Silicon Valley disruptors (i.e., Uber and Lyft). The need to pressurize regulators lay behind a limited social media campaign and the protest at Freedom Plaza.
The impetus for the protest was the last-minute cancellation of a DC Council committee meeting in which Rogers would be confirmed as director of DFHV. The committee chair, Councilmember Brianne Nadeau, canceled the meeting when a groundswell of 1,300 people registered to attend, an unheard-of occurrence for a confirmation hearing. Empower was responsible for the influx of Zoom registrations, seeking to hijack Rogers’s confirmation hearing and turn it into a referendum on Empower’s legality.
At first, Nadeau stated that “the number of witnesses registered to testify at the roundtable has exceeded the number of attendees allowed on a Zoom webinar under the Council’s license.” Instead, she said, written testimony was welcomed. Later, she clarified that the number of witnesses registered to testify at the roundtable, which did not have rideshare operations or Empower’s business model on the agenda, would have made it impossible to approve the confirmation of Rogers in a timely manner.
Sear jumped at the chance to lampoon the city. Empower took the cancellation as proof that the District “feared that robust democratic scrutiny would be an obstacle to their agenda.” And despite racking up hundreds of millions of dollars in fines, the Empower CEO put out a press release that his offer to pay $90 to upgrade the District’s Zoom license was not accepted.
Empower’s confrontational tactics against city government have continued. On October 29, 2024, the company’s CEO, riders, and drivers again gathered to confront Councilmember Nadeau at her monthly constituent meeting. DC’s insistence that Empower must register and conform to the law was reframed as an anti-worker stance. One driver, speaking directly to Nadeau, noted that it has been “Democratic Party cities that are showing disrespect to rideshare drivers.” The veracity of the accusation aside, the challenge to Nadeau and local Democrats was clear — how pro-worker are you, really?
Race to the Bottom
Such accusations reveal just how successful the gig economy’s race to the bottom has been. Many Empower drivers have stated that they came to the platform after being unfairly and arbitrarily suspended from Uber or Lyft; cases of unfair “deactivation,” as it is euphemistically called, are indeed common. Consequently, drivers blame the city for taking away opportunities to work.
While the council’s stance that Empower must comply with the law is, we argue, the correct one, it is understandable that some Empower customers and drivers might protest. Arguments about workers’ rights and regulatory compliance are difficult when drivers are demanding a basic right to earn a wage, any wage. As Joan Robinson put it, it seems for many in DC, “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”
Empower’s arguments in DC go beyond taking aim at regulators. At stake, its CEO argues, are driver independence, principles of economic competition, and, ultimately, democracy itself. Empower alleges that the DC Council and its “Uber-funded DFHV” are stifling competition, thereby forcing drivers to use the Uber platform. The DC Council, on this reading, is aiding and abetting Uber and other “legacy” rideshare operations by using regulation to force out a competitor.
Drivers protesting in support of Empower outside the DC Council. (Courtesy of Katie J. Wells)
For many DC residents, these events summon a deep sense of déjà vu. A similar process played out when Uber entered the city over a decade ago. In 2012, an ostensible democratic groundswell in support of Uber’s innovative and disruptive model defeated the “agenda” of so-called Big Taxi and Big Government. Uber’s victory over the DC Council in 2012 saw its operations legalized in the city completely on its own terms. So one might reasonably ask, as the Washington Examiner has, “Who cares if cheaper Empower is unregulated in DC? Uber and Lyft did the same.”
History seems to be repeating itself here. As none other than Karl Marx wrote, “All great world-historic facts and personages appear, so to speak, twice . . . the first time as tragedy, the second time as farce.”
The Original Disruptor
Uber did indeed enter Washington, DC, illegally. The DFHV’s predecessor, the DC Taxicab Commission, reacted to Uber’s entrance in much the same way as the DFHV has to Empower; by enforcing the regulations it had on the books. Vehicles were impounded, and fines were issued.
In 2012, the DC Council took direct aim at Uber’s illegal operation and sought to set a price floor that would protect the local taxi industry from underpricing, as well as a requirement that Uber make 10 percent of its fleet wheelchair accessible. Uber’s response to these early attempts at regulation was devastatingly successful.
In the twenty-four hours prior to the DC Council’s vote on the proposed legislation, Uber prompted its customers and “driver partners” to flood the DC Council with 50,000 emails and 37,000 tweets opposing municipal regulation. Uber’s customers overwhelmed the DC Council with statements decrying the condition of DC taxis, which were often outdated and unreliable. Many testimonies focused on the inherent racism of a taxi system that regularly refused to pick up riders of color or go to certain neighborhoods. With this campaign, which Uber brashly named “Operation Rolling Thunder,” Uber pioneered the “clicktivism” strategy that Empower would later use to send in-app messages to its customers and drivers, requesting that they turn their brand loyalty into political action.
The campaign worked: price minimum and accessibility requirements were struck from the DC legislation. In the process of winning its political battle in DC, Uber created a playbook that other companies would employ when dealing with recalcitrant regulators around the world. Today, this very playbook is the one that Empower is employing against Uber itself — Empower is trying to out-Uber Uber.
Given Uber’s success and popularity in 2012, what, exactly, was tragic about its victory in DC? The demise of the taxi industry was certainly tragic, but given its deep unpopularity, few people wept. Provisions on accessibility, congestion, workers’ rights, and the idea of government regulation for the public good were flotsam and jetsam, wreckage left in disruption’s wake.
The greatest tragedy, we have argued, was not Uber per se, but the set of conditions that allowed Uber to emerge as an apparent solution for a whole range of persistent urban problems. Uber offered a series of fixes, limited though they were, to issues the city had systematically failed to address: Uber could claim it offered a solution to racial inequity within the city, by both employing people of color and serving the city’s poorest neighborhoods. It often showed up when taxis drove by and while DC’s Metrorail system appeared on the verge of collapse. Tech companies like Uber promised to leverage data to create immediate and apolitical solutions to entrenched urban issues, while the city government appeared inert and inefficient. Uber promised a bright new future, and the city could bask in its reflective glow.
Since Uber’s zenith more than a decade ago, some things have changed. Costly political battles over worker misclassification have emerged nationwide, and Uber’s early image as Silicon Valley poster child has been tarnished by a series of corporate scandals, accusations of illegal activity, and declining public confidence in Uber’s ability to live up to the bombast of its early promises.
The broader economic climate has also changed. Uber is now a public company no longer fueled by astronomical quantities of venture capital. Shareholder concerns surrounding a lack of profitability have forced the ride-sharing giant to double down on its core business of providing rides and, especially since the COVID-19 pandemic, meal-delivery services. Driver pay has gone down, and the price of rides has gone up. These issues have created gaps and real frustrations on the part of drivers and customers that Empower seeks to exploit.
Regulators in DC and beyond have begun to reconsider their positions on the gig economy and bring some kind of order to the Pandora’s box of questions unleashed by Uber. Who is footing the bill when drivers relinquish their rights to traditional workplace benefits like minimum wage, sick leave, health care, worker’s compensation, and so on in return for flexibility and the promise to “be your own boss”? Are gig-economy promises to transform cities and make them more equitable living up to the hype? The existential question of ride-sharing’s effects on urban sustainability and climate change also becomes more pressing with every passing year.
These questions and doubts are rightly fueling dissent with the Silicon Valley model of urban governance that defined so much of the 2010s. Though it may be tempting to see Uber and Empower as adversaries, we should think of them as two expressions of the same business logic, separated by a decade and a half.
Out-Ubering Uber
Empower’s campaign to suggest the DC Council is in the thrall of big business is straight from the playbook of corporate civil disobedience developed by Uber. Like Uber, Empower has suggested that it can address persistent, if not worsening, issues of urban inequality in Washington, DC. Empower has made the unsubstantiated claim that its business model “has resulted in an increase in access to affordable transportation in historically underserved communities, particularly in South East DC.” In 2015, Uber also made the never-substantiated claim that its drivers not only “provided safe, reliable, rides throughout wards 7 and 8” but eased issues associated with “long bus wait times, far away metro stops, a lack of taxis, and the increasing costs of owning a car” as well. Perhaps, we’re asked to believe, Empower can succeed where Uber has failed.
While the similarities are striking, we must also account for the differences. A key distinction can be seen even in the companies’ names. While Uber’s moniker promised speed and its business model exemplified the Silicon Valley mantra of “move fast and break things,” Empower responds to a new context. If one googles “Empower DC,” for example, the first hit is a grassroots community organization, which since 2003 “has advanced racial, economic and environmental justice by investing in the leadership and organized political power of DC’s lowest income residents and communities.” Empower, the rideshare company, has evolved to fill an ideological niche in a new landscape where corporate social responsibility rivals corporate civil disobedience as the lingua franca.
Empower’s biggest play, however, comes from building on Uber’s greatest innovation: its championing of a new category of independent worker, the gig worker. The legislative solidification of gig workers’ independent contractor status in laws such as California’s Prop 22 in 2020 and others in New York in 2023 and Massachusetts in 2024 represent huge victories for gig-economy companies.
The issue of employee misclassification remains a persistent thorn in Uber’s side. To date, workers’ rights have been trumped by Uber’s promises of flexibility and working when you want. Another gig-economy claim is that classifying drivers as employees will force Uber to let go of drivers, a scenario Uber claims will especially harm workers of color. Confirming gig workers’ independent status, Uber argues, is an equity issue. While a plethora of commentators, lawmakers, and driver organizers have pointed out the deep hypocrisy of claiming that drivers are independent entrepreneurs, the vision has proved powerful.
Empower’s business model directly addresses these concerns around worker status, offering an alternative to workers whose earnings are obliterated by Uber’s take of the ride and by algorithmic wage discrimination. Empower claims to fulfill Uber’s promise to allow workers to truly be their own boss. In the company’s own words, “Empower is disrupting companies like Uber with an innovative model: drivers set their own rates, keep 100% of the fare and pay the company a subscription fee.” (The result is, reportedly, cheaper rides on average, though whether riders earn more is hard to prove given the absence of publicly shared data from the app.)
Parsing the language of Empower’s narrative is important in the euphemistic world of the gig economy, where language and regulation are so deeply entwined. Uber, for example, has argued that it is not a transportation company, because it does not own cars and does not directly employ drivers. Rather, it is a Transportation Networking Company (TNC): a digital platform that links driver partners with customers.
Empower markets itself in a similar mold, arguing that “we provide software and support services to drivers who want to build and run their own businesses.” According to Empower CEO Sear, the reason Empower hasn’t registered with the DFHV is “the same reason that Expedia doesn’t register with the FAA, or OpenTable doesn’t register with the local health inspectors”: Empower merely offers support to drivers, a platform for their business. This sleight of hand allows Empower to say that it treats drivers better than Uber, while simultaneously claiming exemption from even the minimal regulations the DFHV seeks to impose, or from the minimal benefits that Uber offers, like the provision of a 1099 tax form and collision liability insurance.
But what, one might ask, of workers’ rights? Benefits? Insurance? Sick pay? Empower answers that workers are not really workers at all ― they are customers. It was Uber that first championed the idea that its “driver partners” were more like the customers they served. Now Empower is asking us to follow this transformation of the category of worker/employee to its logical conclusion. The erosion of worker rights and the discursive and regulatory assault begun by Uber on workplace protections is now complete, with the worker reborn as a subscriber.
Stopping Another Regulatory End Run
We have learned too much about the logic of the gig economy over the last decade to be fooled by Empower’s arguments. Is an Uber monopoly on ride-sharing bad for drivers and customers? Yes. Is Empower the solution? No. It might be temporarily cheaper, like Uber and Lyft once were, but it will take much more convincing to show that its business model is sustainable, fair, or even safe.
The increase in prices of ride-sharing has been linked to the straitened economic circumstances that Uber and Lyft now face. The “millennial subsidy” of cheap money and artificially low prices has evaporated, and prices are now closer to those of traditional taxi services. The answer to how to make ride-sharing as attractive or as cheap as it was in 2012 cannot be embracing unregulated and uninsured drivers roaming our streets.
Solving the structural issues that DC still faces in transit, housing, inequality, underemployment, and congestion will not be accomplished by more unregulated apps and an even more accelerated race to the bottom for workers. And opposing Empower does not mean upholding Uber as a paragon of the gig economy. On the contrary, opposing Empower signals that regulations have value and should be enforced. Imposing the very basic regulatory frameworks established by the DFHV is a minimal step in the right direction.
If we want a more sustainable and just city, we’ll have to do a whole lot more. But let’s start by making sure that history doesn’t repeat itself yet again.
#USA #Washingtom_DC #Uber #Empower #disruption #transport #taxi
